mocoNews - Earnings Call: Apple Declines To Discuss Whether We've Hit Bottom 'We Aren't Economists'
Wednesday, April 22, 2009; 8:59 PM
Apple (NSDQ: AAPL) easily beat Wall Street estimates during a very busy quarter for the company, in which it came out with new Macs, unveiled a tiny, talking iPod shuffle, and even showed off new features from its upcoming iPhone software update 3.0.
On today's call, COO Tim Cook and CFO Peter Oppenheimer were willing to address Steve Jobs' return at the end of June (they are looking forward to it), before getting anywhere close to predicting whether the economy had hit bottom yet. "We aren't economists, so we aren't entering the game." If there's any to be gleaned from Apple's forecast?since they are normally conservative anyway?its expecting revenues and earnings per share to fall on a sequential basis.
Highlights from the call:
?iPod Sales: We sold 11 million iPods, which is a new March quarter record, and represents 3 percent year over year growth. We generated strong iPod Touch sales, and we introduced the all new iPod shuffle, featuring a new industrial design and voice technology. Oppenheimer: "We remain really pleased with iPod. We have over 70 percent market share, as published by NPD, and continue to increase share year over year in markets," like the UK, France, Germany and China.
?iTunes store: They introduced a number of changes, including DRM-free songs as well as adding thousands of independent artists. They now offer 35,000 apps, compared to 15,000 in last phone call. We are hours from reaching the 1 billionth download. "We believe it's a key differentiator, software is a key ingredient for a good experience. We believe we are years ahead of the competition." ?iPhone: We are now selling iPhones in 81 countries. On March 17, we provided developers with a preview of OS 3.0?."They [developers] have responded really enthusiastically, and believe customers will love it." As a side note because they announced specific new features that will becoming out in a free upgrade to iPhone users, they won't recognize any revenue from iPhones from March 17 on until the software update is released this summer. Handsets sold prior to March 17 are not affected.
?Economic recovery?: Oppenheimer said they believe average store sales fell because of the poor consumer environment. But as to whether there was a stabilization occurring in consumer market, like others are suggesting, he wouldn't say. "We aren't economists, so we aren't entering the game." Still, despite the conservative estimates, they were very bullish on what they have coming up. "We are extremely enthusiastic about iPhone 3.0 and can't wait to get it in our customers hands this summer. We are also very excited about other products in our pipeline."
?Netbook is a no-go: There were no kinds words for the trend for netbook, which are essentially cheaper, scaled down laptops. "I see cramped keyboards, terrible software, chunky hardware?.It's not something that we would put the Mac brand on, quite frankly?People who want a small computer, they might want to buy an iPhone or iPod Touch. We have other products that accomplish."
?App Store: Cook said: "One of the keys behind of the growth of the App Store this quarter was the iPod Touch. Sales more than doubled year over year. The sum of iPhone of and iPod Touch is now 37 million units. It's an enormous platform for developers can develop on. It unleashes a whole new level of innovation."
?AT&T's exclusivity arrangement: "We view AT&T (NYSE: T) as a very good partner. We believe they are the best wireless provider in the U.S. and we are very happy to be doing business with them. They've done a good job with the iPhone and believe they have put their full weight behind it. We are happy with the relationships, and don't have a reason to change it."